is simply fed up with the white house. >> there is a stalemate. let's not kid ourselves. the white house stance three weeks trying to develop a

proposal and they send one of pier that calls for over one half trillion in new taxes, calls for not even $400 billion in cuts and this extra spending that is greater than the amount they're willing to get. but not a serious proposal. lou: senate minority leader writing a little easier in the midst of what is at best a process. he burst into laughter when treasury secretary presented the president's plan. the resident, meanwhile, showing no sign of interest initiation, giving no sign he is rey to make any significant step toward resolving the impasse. president obama cast himself as santa claus in a campaign tyle rally. his comfort zone, while blasting republicans and reminding them, he will not forget who stood in his late on tax increases.

>> of course santa delivers everywhere. i have been keeping my own money and nice list for washngton.

visiting towns like this. >> president obama got his wish rather than negotiating with republicans he was simmering them back on the campaign trail at a factory in pennsylvania that makes angry birds toys. >> it's not acceptable to me, and i don't think it's acceptable to you for and full of republicans in congress told middle-class tax cuts hostage simply because they don't want tax rates on upper income folks to go up. >> within minutes the speaker fired back that the talks are now on life support. >> there is a stalemate. let's not kid ourselves. >> replan the president for sending treasury secretary to capitol hill with a proposal that led senate replican leader to literally burst out laughing. >> the white house took three weeks to respond with any kind of a proposal. much to my disappointment it was not a serious one. >> the president campaigns on

$800 -- 800 billion in tax increases by ending the bush tax cutsor the wealthy, but is now proposing. adding tax hikes on dividends and capital gains. the white house wants 50 billion in new spending next year alone in a long-term deal that is supposed to be about cutting spending. >> not even $400 billion in cuts and they want to have this extra spending that is actually greater than the amount they're willing to cut. it was not a serious proposal. >> the president may have the upper hand because the fiscal cliff tops allow him to back the opposition into a corner by framing this as republicans raising taxes. >> if congress does nothing, every family in america will see theiincome taxes automatically go up on january 1st. that is sort of like a lump of coal you get for christmas. >> congressional democrats operating like they don't have to compromise on spending or taxes.

>> elections have consequences. the president campaigned, made it very clear. made very clear that he was supporting ta cuts for the middle-class, that he wanted the expiration of the tax cuts for the high end. >> very little progress among the inside player so far, the president plans to keep pressuring republicans from the outside. meeting with the nation's governors on tuesday and then addressing the business roundtable on wednesday. lou: thank you. ed henry, fox news chief white house correspondent. joining me now, a pulitzer prize-winning journalist, campaign strategists, former reagan political director of, veteraran democratic campaign strategists. we thank you all for being here. let's turn, if i may, to you. this is an impasse, a stal

i'm going to be the one who raises taxes, but you're going to be the ones tocut medicare. if you want cuts in entitlements, but the mob. i'm not going to do both for you. lou: here is a thought. that is, the obama white house

has made a rare mistake, miscalculation. they have incentivized republicans to say, you know, the heck with it. if you're not going to come to the table, we are not going to advance it. you have chosen and we have reached an agreement as to parties for sequestration. we will go along with the tax cuts. that's your decision. sequestration was part -- we are partners on that deal. let her rip. they're going to get twice as much in the way of spending cuts as an increase in taxes that way it's the best deal, and it's also oriented toward the republicans favored. >> the damage it will do to the economy. i don't think the president has a bigger role as he thinks he is. the house will be held by republicans for the foreseeable future, not just two years. midterm elections, six years,

sterile for the president. the end of the day he wan a legacy. it's going to be the highest unemployment in history for two terms it is not careful. he will take us back into recession. if he wants serious negotiations that will sit down and me to some kind of an agreement. we have been down this road before where republicans of given on th taxes. was in the white house with reagan. they promised dollars in cuts. they didn't give us anything. bush went through the same drill when he broke his tax pledge, busch sr. we have had this history before. basically, tell us what you're going to do. there will be a stimulus by fixing he northeast from the storm. add another 50 billion out there on top of the package. and then the audacity of saying, i'm going to raise the debt ceiling whenever i want to. give me permission to do that. it's absolutely absurd. lou: the presidents reached exceing his grasp? >> we will ee. he clearly thinks that he is in a strong osition or you would

not be trying this. i think he thinks that the optics work for him. >> but it was ms. mccall's idea in 2011 to give the president the power to raise the debt ceiling by himself. this was not some dmocratic idea. it came from its mcconnell. on top of that, the problem -- lou: using the president is not an original thinker? >> well, my point is that it was a bipartisan idea, a lot more bipartisan. lou: you don't suppose that was a one of proposition on the part of senator mcconnell. >> it may well have been, but the further point is, i agree with a lot of what he sid. the problem is going to be not just the fiscal cliff, but also if it goes down the way and was talking about we're going to have a middle-class taxes go up in sequestration as well.

disco cliff? >> if congress does nothing every family in america will see their income taxes automatically go up on january 1st. every family.

everybody here will see taxes go up. i'm assuming that doesn't sound too good to you. it's sort of like a lump of coal you get for christmas. the scrooge christmas. lou: most people don't even know where the real tax hikes will be coming from. we will fix that in tonight's "chalk talk." massive defense budget cuts not even part of the discussion so far about the fiscal cliff. those cuts are set to go into affect in three weeks. admiral james lyons joins us in just moments. twins. i didn't see them coming. i have obligations. cute obligations, but obligatio. i need to rethink the core omy ptfolio.

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♪ lou: welcome back. we are talking about the disco cliff. we are going to turn to advance in the middle east and the united nations this week. judy miller, joe trip be, and rollins. i wanted just go back to the fiscal cliff just for a second.

that is, the republican messaging, if you will. they have an opportunity here, it seems to me, as well as a problem, but i don't hear creative, imaginative, if you will, rhetoric or language or positioning or mesaging. >> we have been for about three years now. so i think there's no reason for it to start now. what house republicans have to understand is they are the republican party for the next four years and have to have messaging and baically tell the american public what they're doing and why they're doing it. they can't be for tax cuts, for spending cuts. they have to articulate how it fits in the big picture. there are some skilled people that need to step forward. lou: would i be too cynial to say that perhaps the president has an additional advantage in this little carrousel of nonsense around the fiscal clef in that it also deects and distracts from that half trillion dollars in new taxes

that will be hitting the middle class in this country as a result of obamacare beginning january 1 with orwithout a fiscal cliff? >> well, we can get into -- a lot of that is penalties, taxing cadillac plans. -- lou: how much you want to take it down? >> but mpoint still would be, i think it is right. completely right. you know, they have the house, and they're going to have it for another term or two just because of the weight reapportionment happened regardless of anything else. and the problem, i think he has on the republican side, the house caucus cannot agree on how to take the president on. you have people who think they should cave on the tax increases, the 2%. others who don't, don't want to do a penny of any revenue. the problem is, it's not just a messaging problem. it is a corralling the house

caucus. lou: we should point out. he has made it clear he is not gone along witthe president's idea, the death tax. by the way, $800 billion in increased revenue, a 51 vote. they're not going to get that. so both sides have plenty of those, if you will, divisive mechanics and dynamics at work within their party. >> that's tre. lou: your thoughts? >> it's true, but if you're playing defense as the house republicans are, you really need a message, a consensus message, and they don't have one. the presidenis going to get a lot more intense face time from the medium then max baucus. his argument will be heard, but not the republicans if they're at one another's throats, which i think is part of the democratic strategy.

>> 218 votes, 45 years. so you're not going to get -- whatever the debate in our caucus, a very respected member went out and got clobbered when he basically said, i'm going to try and be a leader here as he had been significantly. some licenses in the we will basically come up to the conclusion. if the president does not want to sit down and negotiate the prestige of the country will pay a price. lou: i told grover norquist, he must like tom cole lot because all he would say in response was interesting tactic. thanks for being with us. in the "moneyline" tonight, a stalemate in washington d.c. wall street's back today. the balance squeaking out of four. gain. s&p up less than a point, nasdaq slipping lower on the day. volume on th biboard slightly heavier than usual.

all the major indexes finied higher for the month. down 71 points. s&p and nasdaq both ended higher. the three biggest winners for the month, cisco systems up to nine 1/4%. home depot, bank of america, both of just above 6%. aaa now urging the environmental protection agency to halt the sales of gas with directional concentrations arguing the fuel blend known as e 15 with an additional 5% ethanol cause engine damage but that is not covered by most car warranties. the epa says cars made after the 2000's one mall can handle that fuel brand. triple late shows 95 percent of carsmade before 2012 will not. up next, president obama meeting with everyone about the fiscal cliff, everyone except for the leaders in washington d.c. for

the republican party. we will share ourist of people that the president might also want to think about sitting down with. it might have just about as much affect as president obama plane taxman. how much higher? we will show you what some suspect about the math in d.c. in the "chalk talk" next. you stl think you'reolder than me? nah. don tell me. tell tiny! [ ice crackling ] [ knuckles cracking ] and who are you supposedo be, back-up? handlet. what you looking at? ha! cat-like reflexes... whoa! [ male announcer ] the coors light silver bullet pint. it's bigger. it's resealable. it's still the coldest. don't you do it. don't you do it! [ male announcer ] frost brewed coors light. the world's most refreshing beer! mortgage.

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♪ lou: we have a national debt net of $16 trillion. we want to do a little something in that "chalk talk" tonight to bring some simple math home, primarily for the benefit of thosewe eected to represent us in washington d.c.

and if cbo, a congressional budget office projections are right, that 16 will be a trillion dollars higher next year. if the fiscal cliff is avoided, the feral government is expected to spend, let'do it this way, over three and a half trillion dollars. that's a lot of money, especially since they are only collecting to one-half in revenue and taes. that leaves us with the deficit of one. that is the deficit. sizable it is. this will be the president's fourth for which he is personally responsible, fourth deficit in excess of a trillion dollars. president obama wants to plug that trillion dollars hole by raising taxes on household incomes, as we all know that have incomes over $250,000.

the top 2%. that would bring in $802 million, $82 billion. that'sbout 8% of that deficit. so does that suggt we have a tax problem or, perhaps, a spending problem? think about this taxpayers making more than $250,000 representing the top 2% paid more than 46% f all texas. that would seem like a pretty fair deal to most of us, but the president says it is not fair. we don't know what that number is. how much should it be? and contrary to what the president would have you believe as he campaigns untack sites all around the country and against the wealthy, he's doing a lot of that. the bush tax rates are not the

root of our problems. in fact, individual tax payments rose, get this, $2,303,000,000,000 or 26%. over the past two ears. under those very low unshared bush tax rates with the difficult slope but a growing economy we still added $233 billion to the federal revenue. here is what happens if obma drives us off the cliff. that 82 billion in higher taxes with the top 2 percentadd to that, we don't want to leave anybody of of this deal, $223 billion. no do you suppose there is a reason that president obama likes to all the talk about those tax hikes, the top 2%?

i wonder why. could it be that he wants to draw attention away from the 400 -- let's do that right here, 400 -- $4 billion projected by the congressional budget office, $494 billion of obamacare taxes that will hit not the 2%, not the 98%, but the middle-class, and they start hitting on january 1st, and it does not matter whether we go over the cliffor not. if you have not heard about those tax hikes, perhaps it is because the mainstream liberal media for some strange reason does not want to talk about the inconvenience impact of obama taxes on our middle-class. >> the bill is passed. lou: the house asses the stem emigration bill. some democrats call it racist and pandering. how is that?

and republicans also introduced the achieve act. other reblicans taking the lead on emigration reforms? i am joined. forget the tech bubble, housing bubble, the student that bubble. the rush to college education is crushing economic futures. the fiscal cliff now 31 days away, still no mention of sequestration cuts. cuts in the pentagon budget with deadly consequences? can this congress and this president figure out how to do the right thing? admiral james lyons joins us next. this family used capital one venture miles

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years, half coming fromour defense budget. joining me now to discuss the impact on our military, nestle security, we are joined by hammer and -- admiral james lyons. they to have you back with us. your thoughts on the impact of sequestration is, indeed, it goes into affect year. >> in the words of the secretary of defense, leon panetta, this will be a disaster. what the obama administration is doing is unilaterally reducing the military capability of our forces. this is at a time when we have china with its massive force expansion, building a world capable force projection capability. we have the russians modernizing the russian forces. we still have the ranian problem totally unresolved, north korea always a flashpoint. look at the middle east.

anything far from being settled there. and let me take that navy as an example, which will be illustrative of the other forces and what it will do to the nay. it will take the navy and drive it down to the smallest force it has had since prior to world war one. not world war ii, lou. world war one. lou: you know, i'm sorry, admiral. when governor romney said that, pointed that out to president obama in the debate, he was -- we had horses and bayonets, too. he seemed to make lht of that. how important is it? can you give us a sense of the impact? >> i think the president's comment is showing his inexperience in military matters. in this particular case we are going downto 220 ships.

to put that number in perspective, i had 2505 ships under my command in the pacific fleet's. 20 percent of those 220 ships will be the literal combat shis which basically have no offensive or defenve cability. we are going to be challenged where we show weakness. and let me give youan example. just today china announced effective january 1 they have authorized their paramilitary naval forces and their police to stop all vesselsin the south china sea that they consider to be there illegally if they have not requested permission. this must be rejected in the most strongest terms. this hits at the core capability of international maritime law, freedom of transit, freedom of

navigation rights. lou: we have not heard from the state department or the white house on that challenge. i do want to turn to one statement by -- you mentioned defense secretary leon panetta. he sai the united states should have what he called an enduring presence in afghanistan to pursue the counter-terrorism effort, the long war that has become the fhion of the last to the ministrations. your thoughts as we wrap up. >> let me tell you about this enlightened. of warfare, counter insurgency. what is, in fact, we are trading our american military life's with the restrictive rules of engagements in the hope of winning the hearts and minds of the tribal society. this is crazy. your first responsibility is to

the protection and safety of your own men and women. lou: admiral, terrific of you to be here, and we appreciate. and i know that many of our forces, is not nely all appreciate what you just said about lon morris. admiral james lyons, thank you. up next, one republican congressman gets a little creative with his reason for backinaway from the anti-tax pledge. coming up next week, we are joined. fox news military analyst with his new book and the former u.s. ambassador to the united nations. stay with us as republicans introduced immigration reform. we take that up next. ♪ [ engine revs ] ♪ ♪

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♪ lou: an excuse -- excuses for

breaking the anti-tax pledge. i know. it's uplights to him. it's a pledge to the voters. congressman chris gibson says he is not bound by the pledge that he made because of redistricting when the freshmen republicans gned the pledge back in 2010 he represented new york's 20th congressional district. now he is in the 19th district. never mind that he still represents just about half of his former constituents. still, that is pretty tough reasoning. to rare win once parts a diplomatic crisis hours before the u.n. general assembly voted to upgrade palestine status to nonmember observer. the official u.n. twitter account released this week on day of solidarity with palestinians stresses urgency reaching one state solution. they just missed it by one

member. the un secretary general, of course, supports aid to state solution. they did corrected. student loans may be the next financial bubble. that new york federal reserve bank, risen to $956 billion or more than 4% increase, not only that, the 90 day delinquency rate has risen to 11%. if you need help getting into the christmas spirit this might help you. a missouri businessman is posing as a secret santa giving away $100,000 in hundred dollar bills to hurricane sandy survivors. thisgenerosity is matched only by his humility. he insists on remaining anonymous and not being photograed all. here is a clue. he and his security entourage have been spotted with red caps watch with the word. [indiscernible] we all love hundred ollar

bills, but not everyone feels the same way about the dollar bill. a new report arguing we should get rid of the dollar bill and replace it with a heavier, but longer lasting dollar coin. why? they say because doing so would save us about $146 million per year. if we want to wage a war on currency, maybe they should think about getting rid of the penny. by some estimates it would save the $60 million per year. it costs to and a half cents to make every penny. now, that is a government at work. two and half cents for every penny. president obama planning to meet with governors next week as pt of his effort t talk with people about avoiding th fiscal cliff. members of the national governors' association executive committee meeting at the white house next tuesday, including chairman teller governor as well

as wisconsin governor scott waer. the president will deliver a speech to the business roundtable was a recap the president has delivered a speech at a toy factory, met with small business owners, mddle-class taxpayers, labor union leaders, two groups of business executives on the cliff, but has not met with the republicans with whom he has to deal in order to cut a deal. up next, the house passes gislation to provide visas to emigrants with advanced degrees. cries of racism from one democrat. we will take it up in the "lou dobbs forum." publicans leading the way on immigration reform. we will take that up as well. on our way to this break, here is our list of the folks the president should also consider meeting with on the fiscal cliff.

♪ lou: in "lou dobbs forum" we will alk about illegal immigration and efforts to change our immigration laws. the house today passed the so-called stem jobs act that would provide 55,000 permanent residency visas to foreign students with advanced degrees in science, technology, engineering, and mathematics. the republican measure drew fire from democrats, some democrats, some going so far as to level the measure racist. >> that is racist if not in its intent then certainly in its effect. republicans have received were

just received historically low votes from minorities in the past election, yet they want to create an immigration system that gives vises with one hand while taking them away from mirities with the other. lou: joining as now, the co-author of numerous anti illegal immigration laws in a kansas secretary of state, also with us, the attorney, executive director of the national immigration forum. good to have you with t

cards in a lottery. i'm not kidding. we were giving them away in a lottery all over the world. what this does is take those 55,000 visas and gives them away in a way that serves our national interest to people who have advanced degrees and can

help our country. in contrast, the itsy act which is a different bill that went to the senate, i think that is a disaster. basically just a rehash amnesty version of the. >> translator:. i think it is dead on arrival and am hopeful that republicans we will hold the line and resist amnesty. lo well, i don't personally understand how we could not witness the republican party and democrats. the itsy backs, to be fair, does not provide for citizenship. provides a pathway, if you will, for legal status with some rather strict conditions. >> well, because amnesty is anything that gives the illegal alien what he is stolen from the united states, which is a presence in the united states. >> kind of a child you. >> hold on. the edgy backed gives you basically a green card forever. permanent residence status forever.

even though you don't get citizenship, y get to stay here frever. now, the question of stealing, if you are giving someone lawful presence which they did not have to wait in line. lou: i have to get him in here. i appreciate you. time constraints. your reaction to both of these legislative -- >> i mean, as a piece of legislation, of very solid step toward. practically zero unemploynt. the house of representatives could have done better. we are actually need workers who are skilled engineers but who are skilled worke. lou: aren you worried about doing what has been done to the past seven years, to quibble and let the perfect the enemy of the

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lou: we are back with our guests. we like the perimeters of this. let's talk about the. >> we want to see what the senate does. it is really the opportunity to come out of the election. what is in store for 2013? a range of conservatives have been talking about the need for broad immigration eform and. lou: these small things, all four of us have witnessed what has been slow, frustrating, and

fruitless over the course of the past seven or eight years in which democrats have insisted upon the whole rather than incrementalism and the issue of immigration reform. the result has been disastrous. what are we going to start talking about what is in the national interest and get rid of this work comprehension, which all too often is misused? to this point it has been futile? >> it can be done. you can do it, the president is of the same party and what the chairman has done, you see.

>> i look at what the speaker says. that we actually need a national immigration strategy that servicer nations interest. i believe the republicans are starting to put their vision for the reforms and his national immigration system on the table. come january, speaker boehner, senator mcconnell, will they be able to wrangle their caucuses. lou: i don't think they will have to wrangle them so much. i'm not sure that they are going to be pursuing what you are intimating. >> what are your thoughts? are you prepared to make

compromi over this achieved asked? >> not if it retains t amnesty power, which means giving presents to those who are illegal in the country. it is a fiction to think that e suddenly embrace amnesty and abandon our principles. ronald reagan got 35% of the latino build. in 1986, he signed the amnesty bill. you would think that his or support would skyrocket. but we were wrong. the idea that we should abandon our principles, in order to go after those votes, simply historically does not work. >> the idea that we should do the opposite is just, it is rational. lou: we are going to have to leave it here